party here in moscow top stories now past the hour the u.n. security council unanimously votes to send a three hundred strong observer mission to syria amid reports of truce violations by both the rebels and government troops. there's a media blackout in france ahead of sunday's presidential poll with voters facing a tough choice at a time of social division and record unemployment. energy hungry china works to secure a slice of the arctic riches the chinese premier on a tour of the nordic states hopes to win support from beijing to tap into the mineral resources hidden beyond the arctic circle. and that's it for me in the news team for the moment will be back with more for you in half an hour from now in the meantime norna stuff is next with capital accounts fraud in our studios in

washington d.c. . good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines variable plenty of two thousand and twelve u.s. banks will now have more than two years to comply with the bull a role the federal reserve and other regulators announce this pushes the date back significantly from what was supposed to be the deadline of july this year and it means bates will have two warriors to push for changes to regulations that are supposed to stop the kind of excessive risk taking with federally insured money that helped lead to the financial crisis in the first place and speaking of lobbying for regulation so they work for you remember john poor design at m.f. global reportedly did just that helped to allow him to make the huge bets on europe that brought the burden down and took more than a billion bucks of customer money with it well next week the case heads to the hill

again and new e-mails have been produced has more information come out that helps build a criminal fraud case and what does it show us about the bigger picture and going out for possible crimes committed during the financial crisis that we've seen so little understand for and as the international monetary fund has its spring meetings are going on right here in washington forget the play by play analysis over who is pledging what amount of money to i.m.f. firepower what is the real role of the i.m.f. we'll break it all down in a word of the day web exclusive and you can catch our you tube channel this weekend let's get to today's capital account.

it's friday so let's take stock of this whole m.f. global issue because it's been almost six months and since and the global surprise its customers with this rather apropos hall the green surprise bankruptcy filing and if global filed for chapter eleven bankruptcy protection we are continuing to track the bankruptcy of the and global pharma brian by john for signs we are continuing to go through all of this. bankruptcy filing just this morning by m.f. global. everyone was paying attention when it was breaking news but since then we've heard reports from sources close to the investigation in the mainstream press saying that that case has gone cold but the case really gone cold or are those who are in charge of the investigation the regulators and the trustees simply spray and teflon on every potentially sticky piece of evidence that could lead to criminal prosecutions and ultimately the recovery of stolen customer money we wish that m.f.

global were just a one off affair a bad apple if you will unfortunately it seems more likely to us that this is another milestone in the history of what we see as criminality that is swept through the financial services industry by some sort of medieval black leg the black death for capital formation it seems the only time people are held accountable anymore is when they commit crimes that affect the super rich bird you made off is a prime example how long did it take for the media and the courts to hang the man accused of running the largest ponzi scheme in history not very long made up a securely behind bars but john f. lawn done quarantined is busy who knows what ordering carmel proper chinos of the locals says he goes to shop for office space in new york as reports have come out bothered only by the low did of discontent and the dating from the blogosphere and

shows like this apple account what a nuisance we must be to the new god of wall street but ok that's not entirely fair we have had some hearings on capitol hill and there will be another one next week planned on tuesday by the senate banking committee remember these have really been the fertile ground for some eyeopening statements made by m.f. global execs take a look. i was not aware of that transfer before it was made so i would not know that i was away for the majority of that week and i apologize in advance if i'm unable to add a great deal of detail will serve our responsibility was to oversee the global finance function i was not responsible for but as you can see it was quite a lumina doing so to tell us what we should hear next week is someone who has been following this all very closely since the start is marking a len post of the uncorrelated investing show an author of high performance managed futures he's a veteran of the futures industry was shocked when this all went down and since then i think he's only become more shocked i would imagine it everything that

you've uncovered first mr malana welcome back to capital kind of nice to see you. likewise learn now let's go to this hearing because there is one coming out next week and last time we had the legal counsel the c.e.o. opposed the treasurer deflecting blame or in the case of the treasury pleading the fifth now this hearing we're going to hear from some new folks the trustees in the case also regulators and from what has been reported this is supposed to focus on what can be done to prevent this kind of thing from happening again my question to you mr mullin what really should be the focus of this hearing next week. well i hope that this isn't a message that's been sent that this issue is going to be swept under the rug and that this is going to be the end of the m.f. global investigation because quite frankly i believe the world is watching informed people know what is occurred here and i think there's going to be a hit market integrity and the perception of us markets security enough global's

and swept under the rug that's my concern so in these hearings there are some great people that should be answering some questions you know in my opinion louis freeh among them. you know mr freeh it's been documented held the information on and off global and there were reports that louis freeh was supposed to be providing information to d.o.j. but evidently that didn't happen because mr corazon six months after what is arguably a criminal offense has yet to be questions ok so i find that troubling well let's get into a couple of the points that you made because we have had politicians rail against m.f. global a hearings according to you there has been over a hundred thousand letters sent to congress about this and of course there's reported by point six billion dollars that's missing from everyone from farmers to ranchers to hedge fund managers investors it's part of an investigation what is going to be questioned do we know if he has or has not or what's happening with that well in congressional testimony on march twenty eighth we learned that he has

yet to be questioned and then that that also confirms an earlier report by the new york times that identified that he hadn't been question and that's very unusual usually if you look at the other cases they question the leading people in the company right away the silent and to not question the principal officers of a company where fraud was alleged from the start is just beyond belief to me what do you think is going on. well i tend to think these are political decisions and right now we're in an environment where if this can be swept under the rug it's going to be swept under the rug and you know if that happens you know i really think we're going to take a hit in the united states in the in the financial services industry i was speaking with a hedge fund manager from korea the other day and he was telling me all about how they're protecting investors over there now korea had their bout with scandal and

they learn from it so if you look at how korea for instance is setting up their alternative investment space it's very interesting i think the u.s. we want to be the investor protection haven not necessarily the place where people are afraid to put their assets i think that's a key point that you know if we go forward in just sweep and off global under the rug there's a good chance that you know we're going to be as an industry fighting harder and harder to track capital to the united states i think that's an interesting point you make and i've heard something about that i talk it has rattle rattle and the us i know many people from switzerland that if that i'm going to be clear and follow up this person you're talking to in korea had were they aware and concerned about amicable. oh yeah my assessment of you know my individual experience is there's not a professional investor who is not aware of. you know and i've talked to

a number of you at this conference in new york that i was that there were a number of people from different regions of the country different regions of the world and you know i deal with a fair amount of people from outside the united states and i can tell you that there's concern among people who are informed and you know some people say oh this will go away people will forget well intelligent people you know professional investors family offices these are people that are going to remember and i just i fear that on the global swept under the rug we're going to be damaging a whole segment of the market and it's par is what it would take for this to not be swept under the rug and if there should be any kind of criminal charges or prosecutions against john corazon i want to know because since the financial crisis we really have not seen any of the major players be charged with crimes being prosecuted we've seen several cases but not major criminal buys and there's you know all sorts of speculation that can be had about why that is lots of questions that it raises but one for people that tend to be i don't know a slightly more conservative side than i am oh it's very difficult to prove fraud

in criminal cases and hey you know i'm not a lawyer so i don't really know but is there more evidence that has come out that would prove or that would substantiate a criminal fraud case for john. ok well let's talk about this and again like you i'm not a lawyer but if we just look at what has occurred there's criminality in the transfer of money violated the commodities exchange act in two locations and potentially three locations so that's a fact so when we talk about the m.f. global money transfers we have to understand that they were illegal money transfers and you know that's just based on what's known in this case so there's criminality there then i think what needs to be investigated is the level of planning that went into this entire event and i'm not going to say that john corazon wanted m.f. global to go into bankruptcy or planned for it to go into bankruptcy i'm going to say that question needs to take place as to exactly what they knew exactly the

instructions that they gave the back office and exactly the extent to which planning took place for them to wire transfer money to counter parties but then send checks to customers which john wrote pointed out in his great p.d.f. also that's one example of clear criminality let's get a little bit more into that because one of the things that you need in order to prove criminal fraud is proving intent and one of the way that this will m.f. global bankruptcy has been characterized by sources close to it and property by the media that i've seen is that there were these chaotic final days were discussed there money difference here and so who knows what happened it's very hard to figure out who knows where this you know billion dollars difference here too you're saying that there may be some evidence of planning you want to just expand on that again what we know about how this possibly was more of a calculated event. ok let's just look at what is publicly known for instance the back office was ascension cleared out of the top three people the week

that they were known to be going into a liquidity crisis this is a report in the wall street journal now the futures industry practice is you know to have the top three people in your back office in charge of protecting customer assets to have them gone at any point in time would be unusual but when you know that you're headed for a liquidity crisis when you know that things are going to be a little crazy you do not let those people go now on congressional testimony kristine's or whisky one of those top three people the c.f.o. of north american fine that's called back to the office and shouts hey is everything ok they're still always fine ok so let's understand that mr corson is testified that things were so chaotic and you know mr winston is testifying that she called back to the office things were fine why didn't mr cord sign call the top people in his organization back to the company it's all hands on deck at that point

i would think but you know that's so that's one of the triplets points let me let me let me hold you right there mark because this is that's an important congress they said i love to get to break which is the most unfortunate things right this second but we are going to come back in a couple minutes we're going to finish your thought and i'm going to talk to you about regulatory capture as it plays a role in this m.f. global case it's important to look at as we see that the volcker rule has been delayed and the time that banks need to implement it for two more years so right there we will have more with mark and author and host of the uncorrelated investing show. and still ahead a loose change dedicated to me a loose change dedicated viewer feedback i'll share my responses to your comments from this week but first your closing market numbers.

there's a currency crisis. cars. trucks are going to graciously. who will be left standing with. the french election parties. before the break i had to stop markel in our gas mid-sentence as he was telling us all of the things that fly against the face of the conventional wisdom perpetrated in the mainstream media about the m.f. global bankruptcy i believe the eighth largest in this country's history taking an

unprecedented more than one billion dollars in customer cash that's supposed to be sucker disaggregated cash that has not been returned nobody's in handcuffs we don't know the state of an investigation but here filling us in on how those last final days were not chaotic is mark maleng host of the uncorrelated investing show and author of high performance managed futures and he's been covering this since the very beginning on a very deep level really. pounding the pavement with this one so mark before the break i literally had to cut you off when you were talking about some of the questions that have been raised about the planning that was going on at m.f. global's bankruptcy do you just want to finish your point about what the significance is of the questions that you have. well i want you sir to get into the details of how enough c.n.n. operates and then compare it to the story that's been told it really doesn't match and so you know when you start to look at planning that's when you get into intense and when you take a look at that check case for instance where checks were delivered to customers

that bounced but wires went to counter parties that takes planning it's been reported that this was sloppy for keepin sloppy is when you don't do things consistently sending all checks to customers and then sending all wires to counter parties that's consistent and you know and i think once you start to get into this case you're going to start to learn that instructions were were sent from a certain levels i think that's what an investigation would logically identify and then once you start to get into who actually gave the instructions to to undertake some of these criminal acts that's really sort of lead to the back office and and you know why i'd like to see them have a voice well what do you think that we would hear from the backup if we heard them talking we didn't hear it at all brian plaintiff beth. ok well in terms of you know . i can speculate and i want to make it clear that i don't know edith and i have not directly spoken to anyone who is a subject of the investigation but if i had to speculate based on informed sources

you know some of what i might speculate is that when syringe. called back to the office she came in on a sunday she was initially surprised as part of congressional testimony but you know even the grandmothers come up to her with a small batch of papers and said here's the problems here is we're overdrawn and here's exactly what happened and here's why it happened and here's some issues with these money transfers and here is the story of what happened they were shocked then they look around and they see no one investigating cores on you know so all the sudden they are hard investigated so on the record that they were they were they were ask questions twice it was you know it was a hard investigation they were siloed after the bankruptcy they were put into communication silos they weren't allowed to talk to one another compare that with the c. level executives who weren't questions and who ran the company afterwards and they were translate they had the ability to transfer money after the company declared

bankruptcy for up to six weeks and you know there were some issues about certain holding companies filing bankruptcy later than other holding companies i mean it's it's it's just unusual it sounds very unusual mark i want to ask because when we talk about how we got there in the first place how this all was allowed to happen how or if i was able to have these large events and then use customer money we get into the issue regulatory capture and this is i think important to talk about because we've just learned that the federal reserve and other regulators are going to give banks two more years to comply with the volcker rule which to me based on all of the things that i've heard from sources about how much banks are lobbying this regulation it to said to me banks had two years to either lobby for loopholes or to figure out ways to get around this role so. when we talk about regulatory capture can you talk about john because he lobbied against regulations that would have put tighter restrictions on customer money this was of course months before m.f. global bank doing the very things that this regulation was supposed to curtail so

what do we know about regulatory capture in this case because there are some new e-mails from the c.f.o. you see i believe. ok well here are a couple of points about regulatory capture the the regulatory sources i talked to say that we're on a descending trend in regulatory capture as a matter of fact if these guys are managed futures trend followers they would and so on this thing it's continuing to go down and this is not a one off and i think we started in two thousand and eight and i think we've gotten to the point now where a case can be made that you know regulators are not just turning a blind eye but in certain cases you know they might be aiding and abetting to a certain degree and i think that c.c. documents scandal in my opinion deserves investigation and then couple that with the decision on one point two five that was a celebrated lobbying effort i guess you could call it celebrated and if you look at that july twentieth date that's an important date because that's the date that

they were supposed to be a decision on rule making but they held off that decision so mr kors i'm and is so over debt trade would remain intact now it can be logically argued that if the c. f.t.c. did not. soft shoe that rule one point two five at that point just a core signs later bond offering on august second it's of that same year that the three hundred million dollar question will bond offering would have been very different and their worst there was talk. and part of what could where the senate investigation could go if they wanted to really go somewhere is this search to talk about all of the meetings mr course and had with finra who actually stood from what i'm told stood up to a course on the f.c.c. pretty much stay back to down and there was debate there was dissent from what i understand within the c.r.t.c. as to whether to give mr corps and car plant spurs definitely a fight and it's just amazing this corps and probably has more

influence in washington d.c. than any trader i have ever known and never had no. personally and mr malone we have to leave it there the rest is of course history but important lessons as we look at regulation continues to be stymied or a log be so that it doesn't even get to the point that it had in the first place as i believe the volcker rule illustrates thanks so much that was marc maleng author and host of the uncorrelated and best in show. it's friday so time for viewer feedback in this week is a loose change dedicated your feedback as there were

a lot of comments they caught my eye so earlier this week we talked about the expansion in drone education as it becomes a college major outs with quite successful looking prospects and eric friday of the daily reckoning i'm very touched to say he liked it and in his latest post on barrel drones and other base of species from the show here take a look at his piece as i said that's the title feral drones and other invasive species and he he like that there's a bull market in targeted killings and he quoted that and then goes on to write about the bull market and governmental intrusiveness which he says is very robust and trending sharply higher in his view it is a great read i recommend it and thanks to eric price for including us in his analysis and your analysis if you're watching now we also bantered about payday loans which wells fargo is getting into the business of and which is increasing in political involvement via increased campaign contributions if you need

a refresher this is what they are. i need extra cash right now one day my car broke down and i wasn't going to get hits on friday whatever the reason when you need emergency cash with pay when i made a phone call and that was payday one is here around the clock. so we asked if we asked your opinion on if payday lenders should be regulated at the end of the show and we did get some responses sobeit chocolate space said payday lenders should not be regulated the birth of crony capitalism comes from the idea that regulation is good either the regulators don't do their jobs or they go to bed with the very institutions they are supposed to be regulating the free market is the ultimate regulator first of all great point about regulators not doing their job or being in bed with the institutions they're supposed to regulate because we see cases of that time and time again one that we were just talking about now we agree that the market is the ultimate regulator in the long run but that long run can last a very long time and without regulations that may be longer than any of us are

willing to wait. in addition there without regulations there's nothing stopping the private sector from externalizing cost onto the rest of society if it is profitable for them to do so from externalizing risks to externalizing pollution the private sector is not without its inefficiencies and its called regulations are needed but it is important to build the most robust economic system possible and only use regulations in order to address the imbalances they come from imperfection creating new regulations in order to solve the problems caused by the regulation is not very smart on that i think we can agree and why i'm very red had his opinion he argues if it's not if it's not a payday lenders should be regulated but how they should be regulated in other words what should the rules be for payday lenders should they be allowed to break your legs if you don't repay the loan i sure hope not good point and right before air time i thought it was interesting i got a tweet from a viewer john d. one of our international ones who said payday loans have mushroomed in the u.k.

he does think they need more regulation now this week we also discussed the n.f.l.'s anti-gambling stamp and how it jives with their accepting ads from casinos and i asked shannon as a shareholder about it and one of our viewers said brace shannon is a shareholder do you mean she's a green bay packers shareholder is so that is our. yes janet is also she is a green bay packer shareholder that's what she was referring to full disclosure here on the show now several of our viewers were input that were very impassioned about this graphic that they posted are common words that were very eager for us to show it i looked at it it was so insane we wanted to show you it's a derivatives exposure for banks illustrated stacks of hundred dollar bills great fine viewers take a look at some of them so this one i think is goldman sachs those are stocks of their route it's exposure huge buildings they would make up let's move on i believe this is bank of america i can see the little flag but if i remember correctly again huge exposure and finally j.p. morgan chase which is huge exposure to derivatives in stocks of one hundred dollars

bills it's really a loss for to when you see it that way and keeping it classy before we go mine said well it's friday and lauren is meant to be answering people's questions on you tube well lauren can we have a naked friday or a day of your choice just once a week i promise it won't detract from your message just merely add to it i commend you nice try you got me to read it not a chance though for those of you are big fans of word of the day and ask for it to come back which many of you have look for what exclusive word of the day on the i.m.f. will post it on our you tube channel this weekend as a spring meetings of the i.m.f. and world bank are underway right here in washington and monday make you know we will not have a show i know it's sad that the network is doing technical maintenance on tuesday with old money founder james turk you won't want to miss it and until then that's our show thanks for tuning in do not forget to follow me on twitter out more in the list that you tube dot com slash capital account for the back end to watch that special word of the day and until today for everyone here at capital counts goodnight.

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